MoMSME • State Industrial Policy
Technology Upgradation Capital Subsidy
Credit-linked capital subsidy on plant and machinery when you modernise — claimed against a sanctioned term loan, from the central window and your state's policy
15%
Typical Central Subsidy
P&M
Eligible Assets
Credit
Linked to Term Loan
State
Subsidy On Top
- Subsidy type
- Capital, non-repayable
- Central rate
- Typically 15% of eligible P&M
- Central ceiling
- Commonly ₹15 lakh
- Applies to
- Micro & small enterprises
- Prerequisite
- Valid Udyam registration
- Claim timing
- Before machinery purchase
01Overview
About Technology Upgradation Capital Subsidy
When an MSME replaces old machinery with better technology, part of that capital cost can come back as a subsidy you never repay. It is credit-linked: the subsidy rides on a term loan from an eligible lender, and is credited against that loan rather than paid to you in cash.
The central window, run by the Ministry of MSME through nodal banks, has historically paid 15% of eligible plant and machinery cost, with a ceiling that works out to around ₹15 lakh of subsidy. Eligibility is tied to specified products and technologies rather than any machine you choose to buy.
The central scheme has opened and closed by plan period, so the live route is often your state's industrial policy instead — most states run their own capital subsidy on plant and machinery, and several are more generous than the central rate. Which window is actually open for your sector and state is the first thing we check.
One rule matters more than all the numbers: apply before you buy. A capital subsidy is claimed against a sanctioned term loan, and paying for the machinery first can forfeit the claim entirely. Talk to us before you place the order, not after.
- 01
Money You Keep
A capital subsidy is not a loan. It reduces the cost of the asset permanently, and there is nothing to repay.
- 02
Credit-Linked
The subsidy attaches to a term loan from an eligible lender. Buying machinery from your own funds usually forfeits the claim.
- 03
Central Plus State
State industrial policy runs its own capital subsidy. Both can often be claimed on the same investment, and are assessed together.
- 04
Timing Decides It
Claims are time-bound from the date of investment, and several windows require sanction before purchase. Sequence is everything.
02Who can apply
Eligibility Criteria
Who Can Claim
4 points- Micro or small enterprise with a valid Udyam registration.
- Manufacturing units primarily; service units only for specified eligible equipment.
- The technology or product must fall within the scheme's approved list.
- Not in default to any bank or NBFC; satisfactory credit conduct.
What Qualifies
4 points- New plant and machinery — second-hand equipment is normally excluded.
- Purchased against a sanctioned term loan from an eligible lending institution.
- Well-established, improved technology, not merely a like-for-like replacement.
- Land, building and working capital do not qualify as eligible cost.
Subsidy & Ceiling
4 points- Central window has typically paid 15% of eligible plant and machinery cost.
- Central ceiling commonly works out to about ₹15 lakh of subsidy.
- State capital subsidy rates and ceilings vary by state and district.
- Claim is time-bound from the date of investment.
03Paperwork
Required Documents
0 / 12 ready
Tick the documents you already have
Enterprise & Registration
Machinery & Investment
Financials & Claim
04Step by step
Application Process
- 01
Window Check
3–7 DaysWe establish which subsidy is actually open for your product, sector and state — central, state, or both — before anything is committed.
This is the step that prevents a forfeited claim.
- 02
Term Loan Sanction
3–6 WeeksProject report and projections prepared, then taken to an eligible lender. The subsidy is credit-linked, so the loan comes first.
Can often be structured under CGTMSE so no collateral is needed.
- 03
Purchase & Commissioning
4–12 WeeksMachinery ordered against the sanction, installed and commissioned, with the evidence a claim will later require kept in order.
Invoices and payment trail must match the sanctioned proposal.
- 04
Claim Filing & Release
2–6 MonthsClaim filed with the nodal agency or state department, queries answered, and the subsidy credited against your loan account.
Following up unanswered queries is the bulk of the work.
05Why it's worth it
Key Benefits
Permanently Cheaper Asset
The subsidy reduces what the machine actually costs you, and there is no repayment attached to it.
- Non-repayable
- Credited to the loan
- Reduces effective EMI
Capacity Without Dilution
Fund an expansion on subsidised credit rather than by bringing in a partner or investor.
- No equity given up
- Higher output
- Better unit economics
Two Claims, One Investment
Central and state capital subsidies can often both be claimed on the same machinery.
- Central window
- State industrial policy
- Assessed together
Pairs With CGTMSE
The underlying term loan can usually be structured under CGTMSE, so no third-party collateral is needed.
- Collateral-free loan
- Subsidy on top
- One combined file
Subsidy Calculator
- Subsidy rate
- 15%
- Estimated subsidy
- ₹1,50,000
Capped at ₹15,00,000. Final subsidy depends on category, location and the sanctioning authority.
07Questions
Frequently Asked Questions
- Usually not, and this is the single most expensive mistake in this area. Most capital subsidies must be applied for against a sanctioned term loan, and purchasing from your own funds first can forfeit the claim entirely. Speak to us before you place the order.
- The central credit-linked capital subsidy has opened and closed by plan period, so it cannot be assumed to be live. In many states the working route today is the state industrial policy's own capital subsidy. We confirm which window applies to your sector and state before you commit to anything.
- The central window has historically paid 15% of eligible plant and machinery cost, with a ceiling that works out to roughly ₹15 lakh. State rates vary widely by state and district, and are sometimes higher. Your actual figure depends on the live scheme, your category and your location.
- Normally no. These schemes fund induction of improved technology, so eligible cost is almost always restricted to new plant and machinery. Land, building and working capital never qualify.
- Yes. A valid Udyam registration is the basis on which you are treated as a micro or small enterprise. It is free, issued the same day, and we can obtain it before the loan application if you do not have it.
- Probably not the best one. For a new unit PMEGP usually beats a standalone capital subsidy, because its margin money of 15–35% applies to the whole project cost rather than only the machinery. We would assess both and tell you which is stronger for your case.
Plan your EMI before you apply
See the monthly instalment, the real cost of interest and how the balance falls, year by year.
EMI Planner
Drag the sliders — everything updates live
Monthly EMI
₹32,241
Total interest
₹4.34 L
Total payable
₹19.34 L
Principal 78%
Interest 22%
Every ₹1 borrowed costs ₹1.29 in total.
What you pay each year
Illustrative only. Your actual rate depends on the lender, scheme and your credit profile.
Real outcomes
Success Stories
“Two CNC machines against a CGTMSE-backed term loan, with the state capital subsidy claimed on top.”
Shakti Engineering WorksCNC Job WorkFunded: ₹68 Lakhs“We were about to pay for the machine ourselves. Being told to get the sanction first saved the entire claim.”
Anand PlasticsInjection MouldingFunded: ₹42 Lakhs“Grading and packing line upgraded, output nearly doubled, and the subsidy came off the loan account.”
Krishna Agro ProcessingSpice Grinding & PackingFunded: ₹35 Lakhs
Technology Upgradation
Ready to Get Started?
Let our experts guide the entire process and get funding approved in 45 days.